Accounting and the Great Divergence—Deconstructing the Dual Myths of Double Entry Bookkeeping in Europe and China
Abstract
This paper examines two connected narratives: the European claim that double entry was indispensable to capitalist rationality and the Chinese counter-claim that an equivalent indigenous system developed before substantial Western influence. Drawing on accounting historiography, published archival studies and Chinese debates over accounting reform in the 1930s, we distinguish duality of entry and profit calculation from an integrated system organised around the debit–credit duality concept, the business entity concept, the accounting equation and accounting for capital. Credit transactions and book transfers encouraged comparable uses of dual entries in Europe and China, but these similarities do not establish conceptual identity or a shared developmental sequence. We show how twentieth-century reconstructions of traditional Chinese bookkeeping were subsequently recast as evidence of a parallel indigenous evolution, often through reconstructed chronologies and retrospective translations of accounting categories. We argue that functional comparison is more informative than measuring all systems against a single Western trajectory. This approach qualifies both myths and situates China’s adoption of modern double-entry bookkeeping within a history of institutional change rather than predetermined convergence.
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